The Australian cartoon dog now beloved around the world appeared in an episode of the 'Please Explain' series produced by the party, where it was hit by a car driven by former Victorian Premier Daniel Andrews with Prime Minister Anthony Albanese in the passenger seat.
It's implied the battered Bluey mows down the premier and prime minister later in the episode, which is titled 'The State of Melbourne'.
ABC Managing Director Hugh Marks said it was a "shocking use of Australia's most loved character" in a Senate estimates hearing on Tuesday.
"Probably the globally most loved character in a video that is both shocking and disrespectful to the children of Australia," he said.
"I can't substantiate it either legally, or on the basis of its usage."
Labor Senator Varun Ghosh described Bluey's use as "heinous", particularly in light of the alleged attack on independent MP Helen Haines on October 19, where she was hit by a car and lost both legs.
To Mr Marks' knowledge, One Nation had not licensed Bluey's likeness from BBC Studios, which distribute the TV show, but could still be entitled to show the character under fair use provisions if Please Explain is considered satire or parody.
But the ABC boss said he did not think that defence would suffice.
"It's not a parody of any Bluey work, it's not a minor use of the (intellectual property). In my view, it is an infringement of the intellectual property," he said.
"I think it's a blatant use.
"We will be taking further action. I can assure you."
The broadcaster will write One Nation a cease and desist letter demanding the video be taken down, with Mr Marks flagging damages might be sought.
The party used Bluey in another Please Explain episode about Queensland, where the dog did not drive into any politicians.
One Nation MP Barnaby Joyce said the Please Explain cartoons were satire and were not meant to be taken seriously.
"You get to a point where you are sanitising beyond satire and you are starting to put restrictions on us," he told ABC TV on Tuesday.
"You've got to have some form of tolerance."
Mr Joyce has previously apologised for another One Nation cartoon calling Liberal frontbencher and former Special Air Services soldier Andrew Hastie a "traitor". The episode remains on YouTube.
The party's leader Pauline Hanson has also said sorry for a Please Explain episode making fun of Tasmanian Senator Jacqui Lambie's vaginal prolapse, which has been taken down.
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